Utah Hospital Groups Launch Non-Profit Company To Manufacture Own Generic Drugs, Aim To Increase Availability

New company Civica Rx will create a number of generic medications to combat shortages and decrease cost of medicine.

A pile of Lipitor pills scattered over drug description
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New company Civica Rx will create a number of generic medications to combat shortages and decrease cost of medicine.

Thursday announced the official launch of nonprofit company Civica Rx, which will begin producing a number of generic formulations of drugs for hospital use. St. George News reports that the company, based in Salt Lake City and composed of a number of Utah hospital groups, will begin with the production of 14 widely used medications. While the specific drugs are still undisclosed, reportedly they will include a variety of popular medications used for infections, pain, and heart treatment.

Reportedly, the company’s goal is to increase the availability of a wide number of industry-controlled drugs for hospital use, while decreasing the overall cost of such medications. The company board chairman Dan Liljenquist stated as much in an interview with Associated Press.

“The mission of Civica is to make sure these drugs remain in the public domain, that they’re available and affordable to everyone,” he said.

According to St. George News, many high demand medications have been in short supply to hospitals for the past 10 years because of the shortage of generic availability. As a result, prices of even the generic forms have spiked, causing higher prices for hospitals, healthcare insurance, and patients. The aim of Civica Rx, says Liljenquist, is to reduce these costs by 20 percent and save consumers millions of dollars.

Fortune reported further on the mission of Civica Rx and its potential effects on the brand-name drug market. While hospital groups with big names are collaborating in the effort, it will be aiming to serve inside 500 hospitals at the start. Furthermore, the company’s chief executive, Martin VanTrieste, is a pharmaceutical industry expert who should be able to help the organization achieve its goals in the market. Reportedly, he will be serving his role as CEO without receiving pay, as the organization claims to be searching for a shortage and pricing solution, not looking for profit.

“We are creating a public asset with a mission to ensure that essential generic medications are accessible and affordable. The fact that a third of the country’s hospitals have either expressed interest or committed to participate with Civica Rx shows a great need for this initiative. This will improve the situation for patients by bringing much needed competition to the generic drug market.”

Civica Rx has a goal to produce its first generic formulation by 2019, which has been speculated to be a difficult feat, Fortune says. However, the FDA is apparently making the approval of drug patents an important mission, which may help.

Many speculate the possible non-profit’s effects on the commercial drug industry, predicting that competitors may slash their prices, as in the tweet above by health reporter Zachary Tracer.